Indar Jeet & Company v Burns Philip (SS) Co Ltd [1979] FJSC 89; Civil Action 267 of 1976 (7 June 1979)

IN THE SUPREME COURT OF FIJI
CIVIL JURISDICTION

Civil Action No. 267 of 1976

BETWEEN:

INDAR JEET & COMPANY
Plaintiff

AND:

BURNS PHILIP (SS) CO. LIMITED
Defendant

Mr. A. Lateef for the Plaintiff
Mr. J. Singh and Mr. D. Maharaj for the Defendant

JUDGMENT

Plaintiff's claim is for the return of $2,199.50 the purchase price of 265 cartons of beer delivered to him by the defendant under a contract of sale and purchase. He also claims damages. His allegation is that the beer received by him was unmerchantable.

The defendant company admits selling the beer but denies the allegation of unmerchantability. It also denies that it is liable to return the purchase price or to pay any damages.

Some of the facts are not in dispute. Early in February 1976 the defendant's agent Jaffar Ali offered to sell to the plaintiff, who owns a liquor store, Foster's beer, a variety imported from Australia, at $8.30 a carton, the ruling price at that time being in the vicinity of $9.50. The company had 300 cartons in stock and the plaintiff offered to buy the lot. By the time the delivery was made thirty-five cartons had already been sold to three other customers and the plaintiff received 265 cartons in all. This was an ordinary sale at a reduced price for the reason of stock clearance and there is no suggestion that what was offered for sale was anything but good merchantable Foster's beer. Jaffar Ali did not make any suggestion that stock held by the company was old stock nor was it suggested by the company's witnesses at the trial.

According to the plaintiff's evidence he started selling the beer soon after delivery and complaints began to pour in from almost all his customers. Chandra Bhan Singh, Manager of Nausori Club, testified that in May he purchased from the plaintiff twenty-five cartons of this beer for the Club, and that members of the Club refused to drink it. He himself tried it and found it undrinkable. Some of the beer was therefore returned and credit given for the remainder. A sample of this beer was produced in Court and defendant's own witnesses agreed that the beer in its present condition was undrinkable. With the exception of a small quantity, all the beer purchased by the plaintiff has remained unsold.

The main issue before the Court therefore is to decide whether the beer in question was, at the time of the sale, merchantable beer.

To prove unmerchantability plaintiff, in addition to Chandra Bhan Singh, called two other witnesses, Prakash Nand and Ram Sewak. They both said that they had purchased Foster's beer from the plaintiff's store and found it "cloudy" and flat and had complained to plaintiff about it. Prakash's purchase had allegedly been made in "early March 1976" and Ram Sewak's "about two years ago". They are both close neighbours of plaintiff's and I find it difficult to treat them as entirely independent witnesses. In any case I cannot place much reliance upon their evidence as to the exact time they allegedly purchased the beer. I have, however, no hesitation in accepting Chandra Bhan Singh's evidence and hold that in May 1976 the beer in question was commercially unsaleable.

Douglas Tilley, a witness for the defence, who gave evidence in a very forthright manner said:

"Some months after the sale the other salesman, not Jaffar Ali, told me there was some problem with beer. I asked him to bring samples of that beer. When the bottles came I passed the samples on to my superiors. I was then out of the picture. Company did not take responsibility for the beer."

With regard to the exact time that the complaint was first brought to him, he said:

"He brought the complaint about three or four months after the sale. I think it would have been more than two months."

On this evidence I hold that it was in May 1976 when the complaint was made and samples delivered to Douglas Tilley. When later a conference was held between the parties at which plaintiff's solicitors and Douglas Tilley were present no assertion was made by the defendant company that the beer contained in the sample bottles was of merchantable quality. It would appear that the company refused to take the beer back mainly on the ground that the plaintiff had taken so long to lodge a complaint. Reference was also made at the trial to dockets accompanying the beer at the time of the sale on which appears the following:

"Goods not returnable after seven days from date of sale."

This, however, is not seriously relied upon by the defendant as a defence to the allegation of unmerchantability. But learned counsel for the defendant company quite correctly submits that it is for the plaintiff to prove that the beer was unmerchantable at the date of the sale and that it did not become so while in his possession owing to conditions of storage.

In this regard the evidence of Leyton Bullock, called by the defendant, was of considerable help. He has been a brewer for a very 1ong time employed by Carlton Brewery here and in Australia. According to his evidence beer by its very nature tends gradually to deteriorate while in storage and all beer would eventually become like the sample produced in Court due to the break-up of protein in it. Beer stored in low temperatures would take longer to deteriorate than that stored in higher temperatures. If the temperature is more than 35 degrees Celsius he would, he said, expect deterioration in about six months. This witness was shown the plan of the plaintiff's storage room (Exhibit 8) and he said:

"I would say this would be normal storage conditions in Fiji. I would be surprised if beer would go bad in this storage within six months."

Douglas Tilley also said that in normal conditions of storage he had not known any beer to go bad in Fiji within a year. Neither could say when the beer in question was bottled by the brewers in Australia. Bullock's evidence on this issue was a mere guess as he did not have the necessary code.

The task of ascertaining what is and what is not of merchantable quality is never without difficulty. As Lord Reid said in B.S. Brown & Son v. Craiks (1971 W.L.R. 752 at 754):

"........judicial observations can never be regarded as complete definitions: they must be read in light of the facts and issues raised in the particular case. I do not think it is possible to frame, except in the vaguest terms, a definition of 'merchantable quality' which can apply to every kind of cases."

Different considerations may apply where an article may be used for more than one purpose as in B .S. Brown & Son v. Craiks (supra) or where an article purchased for a particular purpose may be resold for that very purpose but at a lower price as in Cehave NV. v. Bremer (1975 All E.R. 739). Beer, however, is a one-purpose-only commodity and in a place where good beer is freely available it cannot be sold at all unless it is of a quality which drinkers of that brand of beer may reasonably expect to get. In the instant case the beer in question was not examined at the time of the sale either by the seller or by the purchaser. The whole quantity was removed from the seller's warehouse and delivered at the purchaser's store in sealed cartons. It is, however, agreed that what was offered for sale and what was purchased was normal Foster's beer as was generally available on the market. The fact that it was sold at a slightly reduced price is, under the circumstances, irrelevant to the issue of merchantable quality. According to the evidence, this is frequently done for the defendant's own convenience when additional storage space is required for incoming cargo.

Three months or so after the purchase, or even perhaps earlier, the beer was not fit to drink. It was cloudy and it was flat. It would do no physical harm if drunk, but no one would pay to drink it. It was commercially unsaleable. Almost the whole quantity of this beer has consequently remained unsold to this day. I do not accept the defendant's suggestion that the plaintiff deliberately tried to hold onto this beer in the expectation of its price going up. All the evidence points the /selling other way. I am satisfied that he started/this beer as soon as possible after the purchase and that, in the meantime, it remained stored in his liquor storage room where all his liquor is generally kept and which has conditions satisfactory for storing bear. I reject the defendant's suggestion that the store-room may be getting over-heated. There is nothing to show that any other beer has ever gone bad in that store-room.

The question still remains whether at the time of the sale this beer contained a defect which made it unmerchantable in quality. The question generally is more difficult in case of foods and drinks which are sold bottled or canned. The only authority I have found throwing some light on such cases is George Wills & Co. Ltd. v. Davids Pty. Ltd. (19 C.L.R. 77). The Court there had to consider the merchantable quality of beetroot canned in vinegar. The healthy life of such beetroot was found to be one year. High Court of Australia in that case allowed the seller's appeal because by the time the health authorities had examined the cans and found the beetroot unsafe for eating almost two years had expired. It seems certain that if the beetroot had been found to have gone bad within the period of twelve months the decision would have gone the other way.

How long should beer remain merchantable in Fiji assuming that it is stored under satisfactory conditions? The Court has no expert evidence on the issue and it is not possible to make a precise finding on a basis of certainty. It may well be that different brands have a varying capacity to stay merchantable depending on alcoholic content and other ingredients. No evidence, however, has been led on which a definite finding may be based. There is, however, the evidence of Bullock, an experienced brewer, who said that he would be surprised if beer went bad within six months if stored in the plaintiff's storage room. Tilley's evidence also suggests that beer does not normally go bad in Fiji within a year. A bottle of South Seas beer was produced in Court allegedly from plaintiff's storage room which had been purchased in early 1976. South Seas Brewery at Lautoka closed down later in 1976. The beer was therefore three years old and quite clearly merchantable in quality.

While, therefore, no precise finding can be made as to the normal merchantable life of Foster's beer in Fiji there should be no difficulty in coming to the view that it should not be less than twelve to eighteen months. According to Tilley defendants did not as a rule keep beer in their own storage room for more than three to four months. The inference would appear to be inescapable that if the normal pattern of trade had been followed this beer should not have gone bad as it did before May 1976 unless there was some defect in it at the time of the sale. It may well be that the plaintiff purchased much larger quantity of beer than a prudent trader of his size would do, but in this case there is no suggestion that he was unable, due to a lapse of time, to sell only a small remaining part of this beer. Almost the whole quantity has remained unsold.

According to the evidence thirty five cartons of this same beer had been sold to three other customers at about the same time. No complaints, according to Tilley, were received from any of them. Absence of complaint, however, in such a case has little evidential value. There is no evidence to show what exactly happened to that beer. It would have been helpful if some evidence had been produced from the purchasers to show whether any of that beer was in fact sold and drunk. According to the pattern of trade thirty five cartons of beer between two storekeepers and a club is not a very large quantity and no positive inference ought to be drawn either way as to the reason why defendants received no complaints from them in respect of those sales.

If this Court were to decide on a basis of certainty when the beer in question ceased to be merchantable, its task, on the evidence before it, would have been impossible. The issue, however, in this case, has to be determined on a balance of probability. On that basis I must hold that good merchantable beer sold in February would not have gone bad in April. There is no evidence to show that any of this beer sold before April was found drinkable. The evidence concerning earlier sales, such as it is, points the other way. Neither party examined the beer at the time of the sale. According to the evidence that is quite in keeping with the trade practice concerning sales of liquor.

On the evidence, therefore, I find it established on a balance of probability that the beer was unmerchantable at the time of the sale. Plaintiff is entitled to have the price of the beer returned to him. There will be judgment for the plaintiff in the sum of $2,119.50.

On the evidence, I do not consider that he has suffered any permanent loss of custom as a result of his inability to sell this beer. His claim for damages, both special and general, therefore fails.

He will have the costs of this action which will be taxed, if not agreed.

(Sgd.) G. Mishra
JUDGE

Suva,
7th June 1979